When a signal from sellers to buyers is effective, then sellers
A)of high-quality products can charge a higher price than sellers of low-quality products.
B)of low-quality products can charge the same price as sellers of high-quality products.
C)know which buyers are willing to pay a high price.
D)know which buyers are not interested in quality.

Question

Quizplus · Accepted Answer

When a signal from sellers to buyers is effective, it means that buyers are able to differentiate between high-quality and low-quality products. Therefore, sellers of high-quality products can charge a higher price than sellers of low-quality products because buyers are willing to pay for the higher quality. Sellers of low-quality products cannot charge the same price as sellers of high-quality products because buyers are now aware of the quality difference and will not pay the same price for a lower quality product.

When a Signal from Sellers to Buyers Is Effective, Then